SUPREME COURT STATE OF LOUISIANA NO.

2009-C-1786

CATHY REINHARDT, Individually and on Behalf of Her Minor Son, JOSEPH UNTZ, II, Plaintiffs-Applicants VERSUS TERRY L. BARGER and BARBARA BARGER, Individually and on Behalf of the Minors, BRANDON BARGER, BRENT BARGER, and JACOB BARGER and ALLSTATE INSURANCE COMPANY Defendants-Respondents

APPLICATION FOR WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT, STATE OF LOUISIANA, NO. 2007-CA-2363, APPEALED FROM THE 22ND JUDICIAL DISTRICT COURT, PARISH OF STATEMENT. TAMMANY, LOUISIANA, TRIAL COURT NO. 2005-13156, HONORABLE REGINALD T. BADEAUX, III, JUDGE ON BEHALF OF CATHY REINHARDT, INDIVIDUALLY AND ON BEHALF OF HER MINOR SON, JOSEPH UNTZ, II, Plaintiffs-Applicants

Respectfully Submitted, ________________________ Emily Gibson La. Bar Roll No. 12345 Gibson Law Office 102 Law Center Baton Rouge, Louisiana 70803 Telephone: (225) 000-0000 Facsimile: (225) 000-0000 Attorney For Plaintiffs-Applicants, Cathy Reinhardt, et al.

INDEX 1. Index 2. Writ Grant Consideration 3. Statement of the Case 4. Assignment of Errors 5. Summary of Argument 6. Argument A. Rationale employed by Louisiana courts has led to both inconsistent and inequitable results, within the area of statutory liability as a whole and within the parent-child relationship in particular, and which completely lacks any coherent policy justification for the disparate treatment. B. Under the guise of freedom to contract, Allstate has indirectly circumvented the mandates of Directive 152, subjecting Louisiana parents to exceptional personal liability, in direct contravention to public policy. 6. Verification 7. Exhibits A. Directive 149; B. Directive 152; C. Benefit Recovery, Inc., v. James J. Donelon; [_2_] [_3_] [_4_] [_5_] [_6_] [_8_]

[_8_]

[_14_] [_22_] [_attached_]

WRIT GRANT CONSIDERATIONS As set forth in Rule X of the Louisiana Supreme Court Rules, the plaintiff seeks the granting of its writ application based upon Section 1(a)(2). This consideration states that, A court of appeal has decided, or sanctioned a lower court's decision of, a significant issue of law which has not been, but should be, resolved by this court. The trial court below decided a significant issue of law, that now stands affirmed as rendered pursuant to an evenly split en banc panel of the First Circuit Court of Appeal, since no majority has concurred to reverse or modify the trial courts judgment. Parfait v. Transocean Offshore, Inc., 20071915 (La. 3/14/08), 980 So.2d 634, 638-639. The trial court held that an insurers intentional act exclusion for a parents vicarious liability for the torts of a minor child under La. C.C. article 2318 is not in contravention to the public policy of Louisiana, as delineated by the Commissioner of Insurance, as compared to other vicarious liability relationships that do not allow such exclusions, and as evidenced by the irreconcilable contradictions within article 2318 itself in the context of insurance coverage. This res nova issue is ripe for consideration. In fact, this Court gave a shot across the bow to the insurance industry when it stated in Joseph v. Dickerson: In light of our finding that Judith is not vicariously liable for Christina's negligence, we need not address the validity of the endorsement provision that denies coverage for negligence imputed to the named insured arising out of the excluded driver's use of the car. Specifically, if Judith had been deemed vicariously liable for Christina's negligent conduct, then an important public policy question would arise regarding an insurance policy covering the insured, but nonetheless denying coverage to the insured for vicarious liability. Joseph v. Dickerson, 99-1046, 00-1188 (La. 1/19/00), 754 So. 2d 912 (emphasis added). This important public policy question has come to fruition in the present litigation and thus warrants the granting of a writ. Here, the homeowners insurance policy covering the insured defendant is the minor tortfeasors mother, Barbara Barger, who would otherwise be covered by Allstates homeowners insurance policy since she was a completely innocent party to this lawsuit. However, Allstate has denied coverage for the insured mother due to her vicarious liability. This is a significant and unresolved issue of law that will inevitably affect every citizen of the State. To allow the lower courts plain meaning rationale to determine the insurance contract would lead to a violation of the public policy of the State. Furthermore, to find Allstates exclusionary clause valid and enforceable would allow the insurance industry to do indirectly what it cannot do directly: ignore the mandates of the Commissioner of Insurance as mandated by the Insurance Code of Louisiana. 3

STATEMENT OF THE CASE Plaintiff-Petitioner, Cathy Reinhardt, individually, and on behalf of her minor son, Joseph Untz, II, filed suit on July 7, 2005, seeking to recover damages for personal injuries allegedly sustained by her minor son, Joseph Untz, II, when he was involved in a fight with the male members of the Barger family in front of the Barger residence. Named as defendants in this matter are Terry L. Barger, his wife, Barbara Barger, their sons, Brandon Barger, Brent Barger, and Jacob B. Barger, together with Allstate Insurance Company ("Allstate"), in its capacity as the homeowner's insurer of Mr. and Mrs. Barger. Mr. and Mrs. Barger purchased a homeowner's policy through Allstate that provides coverage for personal injuries sustained on the premises. Ms. Reinhardt alleges that Mr. and Mrs. Barger are vicariously liable for any tortious acts committed by their minor son, Brandon, pursuant to La. C.C. art. 2318. The parties do not dispute that Mrs. Barger took no part in the alleged beating and is therefore an innocent insured. In response to the petition for damages filed by Ms. Reinhardt, Allstate filed a motion for summary judgment seeking dismissal of Ms. Reinhardt's claims against the insurer on the ground that the homeowner's policy issued to the Bargers excludes from coverage any liability arising from intentional acts on the part of an insured (the "intentional acts exclusion"). In a judgment rendered in open court on March 6, 2007, and signed on March 19, 2007, the trial court granted Allstate's motion for summary judgment and dismissed all claims against the homeowner's insurer with prejudice. On April 29, 2009, the First Circuit Court of Appeal, en banc, issued a per curiam opinion due to an even split among the court. As a result, under La. Constitution. Art. V., 8(B), the judgment of the trial court must stand, and the effect of the court of appeals vote is to affirm the trial courts judgment as rendered. Plaintiff-Petitioner now brings this writ application asserting that an intentional act exclusion contained within the provisions of a homeowner's policy that purports to exclude coverage for damages resulting from a parent's vicarious liability for the intentional acts of their minor child contravenes the public policy of the State of Louisiana.

ASSIGNMENT OF ERRORS Assignment of Error No. 1. The First Circuit Court of Appeal has sanctioned the trial court's decision of a significant issue of law which has not been, but should be, resolved by this Court. The courts below failed to consider Louisianas other statutorily imposed vicarious liability relationships insofar as the underlying policy rationale expressed by those decisions necessarily requires a decision contrary to that reached here. In other statutorily imposed legal relationships, courts require insurance coverage for those held liable simply by operation of law. A contrary decision was reached by the lower courts here. Had the courts below made a comparative analysis, they would have inevitably determined that there is no justification for the disparate treatment among the various statutorily imposed relationships with respect to the issue of insurance coverage. In fact, of all statutorily imposed liability relationships, the parent-child relationship is the area of law most in need of protection. Moreover, within the context of the parent-child relationship itself, the law here is illogical and inconsistent with respect to the issue of insurance coverage and liability. This issue is in dire need of clarification by this Court. Assignment of Error No. 2. The trial court also failed to properly consider the public interest and public policy of the State of Louisiana, as delineated by the Insurance Commissioner and as protected by the Insurance Code, when they improperly presumed that the exclusionary provision was valid. Under the guise of arguing the plain language of the policy, Allstate is attempting to do indirectly what they cannot do directly: ignore the regulatory authority of the Department of Insurance and, in particular, the mandates of the Insurance Commissioner. Allstate argues that, under the plain language, the Bargers agreed to the contract and are therefore bound by its terms. The trial court adopted this shallow and conclusory argument, despite the significant legal issues and far reaching ramifications this decision will inevitably have on every citizen in the state. Moreover, the trial courts negligible reaction to the principles of public policy, when confronted with Directives 149 and 152 as promulgated by the Insurance Commissioner, warrants this Courts consideration. Courts are ignorant as to the esteem with which these directives should be held and the impact and role they should have on a judicial proceeding.

SUMMARY OF ARGUMENT This matter should be reviewed, and a writ granted, by this Court for the following reasons stated herein, as well as those expressed by Judges Pettigrew, Hughes, Gaidry, Kuhn, Guidry, and Parro, all of whom raise a number of issues of both unresolved law and critical public interest in the area of insurance coverage in the State of Louisiana. Only in the context of the parent-child relationship is there no coverage afforded to those held vicariously liable for the acts of another. The absence of any justification for the disparate treatment among the various imputed liability relationships proves that the courts below erred in their interpretation of the public policy of Louisiana within the context of the average, reasonable homeowner who purchases liability insurance for the very purpose of being protected from liability. As illustrated below, the rationale for affording greater liability protection to dog owners, employers, stepparents, noncustodial parents, and foster parents is lacking. The dearth of a clear and resolute policy determination regarding this disparate treatment is due to the lack of a thorough analysis by the courts to examine why a parent buys a liability policy, who they intended to protect, and what risks did they intend to insure themselves against. No reasonable parent would buy homeowners insurance for themselves and their family and pay the premiums, knowing they are susceptible to vicarious liability, only to learn that the very coverage they bought did not protect them from such risks. See Directive 149 & 152 (attached). It would defeat the purpose of buying liability insurance if insurance companies were allowed to directly or indirectly exclude such coverage. The absurdity was recognized by courts in the employer-employee context as well as the dog owner-dog context years ago. Moreover, if the purpose of such a distinction is to compel parents to care for and supervise their children, or at least those in their custody, then similar decisions within the context of the parent-child relationship itself would be even more incongruous with the purpose of buying liability insurance as well as the public policy, if any, behind statutorily imposed vicarious liability. Whatever the alleged rationale, courts have failed to recognize the practical effect of simultaneously holding parents personally liable and affording them no insurance coverage. Any

alleged impetus underlying La. C.C. art. 2318 to compel parents to be responsible for their children is completely unnecessary in this context. The parent has already acted responsibly and purchased

homeowners insurance, protecting both themselves and potential innocent victims. Ironically, the law 6

that purports to act for the betterment of society has now punished both the uncompensated victim as well as the innocent parent. The Insurance Code in Louisiana is formulated on one basic principal that is intended to pervade the entirety of the industry. This basic principal is stated in the Louisiana Direct Action Statute, La. R.S. 22:655(D). This States policy in favor of protection for injured persons is reflected in the law which provides that, all liability policies within their terms and limits are executed for the benefit of all injured persons and their survivors or heirs to whom the insured is liable. La. R.S. 22:655(D)(West 2008). The Direct Action Statute also reflect this States policy in favor of protecting insureds, by explaining that, it is the purpose of all liability policies to give protection and coverage to all insured, whether they are named insured or additional insureds under the omnibus clause, for any legal liability said insured may have as or for a tortfeasor within the terms and limits of said policy. La. R.S. 22:655(D)(West 2008). This overarching principal is further strengthened by the constitutionally mandated duty of the Insurance Commissioner to protect the public. The Commissioners oversight and regulation of the insurance industry is fulfilled through various administrative mechanisms, one of which is the promulgation of directives. The purpose and function of these directives is to explain and clarify to both consumers and insurance providers the meaning and intent of the insurance laws. The courts below were erroneous in their interpretation of a significant issue of law, that is need of resolution, insofar as an insurers intentional acts exclusionary provision can preclude coverage for a parents vicarious liability for the tortious acts of their minor child and that such an exclusion is not against public policy. This is an erroneous interpretation of the spirit of the Insurance Code, in direct contravention to the general principal and purpose of liability insurance as stated in La. R.S. 22:655(D), and an incorrect application of the Insurance Commissioners Directives 149 and 152. Moreover, the actions on the part of Allstate is an indirect attempt to ignore the mandates of the Insurance Commissioners under its general regulatory authority. Together with the public policy of the State of Louisiana, these issues demonstrate that it is necessary that a writ be granted, as such a substantial unresolved issue warrants a resolution by this Court.

ARGUMENT A. Exclusionary Provisions Contravene Public Policy as Analogized to Other Vicarious Liability Relationships Where Courts Impose Liability Coverage Several relationships, by the fact of their mere existence, create liability for one individual as a result of actions taken by another. Some of the policy justifications for legally imputing liability is risk spreading and compensation to the innocent victim. Courts have found these types of relationships to exist between an employer and employee, parent and child, and dog owner and dog, under the legal theories of vicarious liability and strict liability, respectively. Knowing their susceptibility to liability, the average reasonable consumer purchases insurance to protect themselves. Up to today, Louisiana courts have said that buying insurance is reasonable and thus protection should be afforded these individuals, except for parents. The justification for allowing some vicarious liability relationships to be protected by insurance, while refusing to allow the parent-child relationship insurance protection, is completely absent at best and is in direct contravention to the public interests at worst. In fact, when these relationships are compared, it is evident that the parent-child relationship does indeed deserve the same protection, given the litigiousness of society and the purpose for which insurance is purchased by the average homeowner and parent. The lower courts finding otherwise, at the behest of insurance companies plain meaning arguments, have done so erroneously. The disparate treatment is unjustifiable and in contravention to public policy as illustrated below. In a vicarious liability case, the employer need not be independently negligent but, as a matter of law, he, she or it is responsible for the employees tort. See Frank L. Maraist & Thomas C. Galligan, Jr., LOUISIANA TORT LAW 13.02 (4th ed. 2004). As illustrated by the analysis of the court in Rivers v. Brown, coverage for vicarious liability in the employer-employee context may not be excluded. 168 So.2d 400 (La.App. 3rd Cir. 1964), writ denied, 247 La. 250, 170 So.2d 509 (1965). The court pointed out that the assault and battery was committed by L.T. Brown, individually, while acting as an agent of the corporation, but it was not committed or directed to be committed by the corporation as such. The court suggested that it would defeat the purpose of the coverage if the policy did not provide protection to the innocent insured against the [intentional] wrongful acts of its employees. Id.; W. McKenzie & H. Johnson, LOUISIANA CIVIL LAW TREATISE: INSURANCE LAW AND PRACTICE 164 AND 184 (West 1986); W. McKenzie & H. Johnson, INSURANCE LAW, DEVELOPMENTS IN THE LAW, 1986-1987; see also Leon Lowe & Sons, Inc. v. Great American Surplus Lines Insurance Company, 572 So.2d 206, 210 (La. App. 1st Cir. 1990)(court found the employers policy did not exclude coverage for the employers alleged 8

vicarious liability for the intentional acts of his employee, as the intentional injuries were neither caused nor aggravated by the employer). Why should innocent business owners and employers be afforded liability coverage for the intentional acts of their employees while Ms. Barger, although completely innocent, be denied the same coverage? Like Rivers and Leon Lowe & Sons, to hold the mother personally liable would defeat the purpose of purchasing homeowners insurance. Along the same vein is this Courts holding in Marcus v. Hanover Ins. Co., Inc., that the business use exclusion violates public policy and is therefore invalid. 98-2040 (La. 6/4/99), 740 So.2d 603, 604. The same public policy recognized by this Court under La. R.S. 22:655(D) in Marcus v. Hanover Ins. Co., Inc., applies to the homeowners exclusion at issue herein: Similarly, the goal of all liability policies, which is to benefit the injured person and to give protection and coverage to all insureds, cannot be realized if the instant exclusion is allowed to be enforced. Id. What part of the relationship between man and dog affords greater protection under the law than the relationship between parent and child? What is the nature of the two relationships that justifies the different protections and privileges in terms of insurance coverage? Plaintiff asserts there is no basis to justify dog owners having greater insurance coverage than parents, but at the present moment, this is exactly the case. On June 30, 2009, the state legislature passed House Bill No. 155 (Act 199) which added 1320 entitled Prohibition of Denial of Coverage which stated, Notwithstanding anything to the contrary, liability coverage, which would otherwise be valid under the terms of the policy, shall not be declared void under any contract provision which specifically denies coverage for any and all acts committed due to criminal conduct, where such criminal conduct is due to the criminally negligent ownership or handling of a dog or other animal pursuant to R.S. 14:32(A)(2) or R.S. 14:39(A)(2). See http://www.legis.state.la.us/billdata/streamdocument.asp?did=667486 (accessed on September 6, 2009). Because of this harsher criminal penalty, the legislature expressly prohibited insurance companies from precluding coverage for these types of injuries. Given the underlying purpose for buying homeowners insurance, i.e., to protect oneself and their family from liability, no justification exists for the general public to be held personally liable for their children and yet covered by insurance for their family dog. Practically speaking, the risk of being held liable for the torts of a child versus that of a dog is exponentially greater. Therefore, if any disparity between liability coverage is to be had, public policy would most certainly demand great protection and greater coverage for a parents vicarious liability. In 9

fact, one would think an insurance company would provide less coverage to dog owners by the simple fact that they are strictly liable. But they do not. Then are parents strictly liable as well? The precise nature of the parent-child relationship is unclear, only adding to the problem of interpreting a parents liability policy. See Frank L. Maraist & Thomas C. Galligan, LOUISIANA TORT LAW 5.07[4] & 14.08 (4th Ed. 2004)(In Louisiana, parents are liable without fault for the torts of their minor children residing with them. As a result, the issues of parents negligence and their duty to control their children is not well developed in this state.). The general rule in article 2318 states that The father and the mother are responsible for the damage occasioned by their minor child, who resides with them or who has been placed by them under the care of other persons, reserving to them recourse against those persons. La. C.C. art. 2318 (West 2009)(The same responsibility attaches to the tutors of the minors.). Applicable also is article 237 which states that Fathers and mothers are answerable for the offenses and quasi-offenses committed by their minor children. La. C.C. art. 237 (West 2009). If the nature of the relationship is such that parents are held strictly liable in tort, then parents will be personally liable for the tortious acts of their child who, because of his young age, is incapable of discernment and therefore incapable of committing a tort but nevertheless causes damage. In this kind of situation, it is irrelevant whether the child was capable of forming the requisite intent. Since insurance policies are written on an occurrence basis rather than a damage basis, the mere fact of damage, regardless of whether the damage was intended, is the trigger is subjecting an individual to liability. See Jones v. Cobb, 834 So.2d 13 (La. App. 2d Cir. 2002)(parent found personally liable, even though child was too young to be personally liable and parent was not personally negligent, under the theory of strict liability). As a result, how can insurance companies exclude coverage for vicariously liable parents when the child is too young to be capable of acting intentionally? Even if the insurance company alleges the intentional acts exclusion applies, how is a parent supposed to dispute the intent of the child when the law has recognized the child as incapable of any intent? As a result, should there be a general rule mandating coverage for vicariously liable parents of young children? If so, then when is a child capable of discernment so as to allow insurance companies to argue their exclusionary provisions? The overarching theme of public policy and the purpose of insurance regulation is to stop absurd and inequitable situations like the above. Holding a family personally liable would put their entire well being in jeopardy, both financially and emotionally, while relaying the message that buying insurance 10

was just an exercise of futility and a waste of money. A third example of the disparate treatment regarding the vicarious liability of minors is seen in Edwards v. Burgess where the court held that neither the state nor a foster parent could be held strictly liable for the acts of a minor child under La. C.C. art. 2318. 700 So.2d 1129 (La.App. 4th Cir. 1997); Opelousas Scrap Materials, Inc. v. State, 525 So.2d. 1144 (La.App.3d.Cir. 1988); see also Washington v. State, 927 So. 2d 1224 (La.App. 2 Cir. Apr. 12, 2006). Thus, if the state and the foster parents are not liable, then neither is in their insurer. The policy rationale behind the different treatment seems tenuous at best, if the purpose of vicarious liability is to truly deter misconduct, entice caregivers to watch over children, and allow for only fortuitous risk spreading. The fears of those who oppose coverage for variously liable parents are present in these scenarios and yet there is no evidence or potential for abuse by caregivers ignoring their duty to supervise by allowing kids to run wild and without legal ramifications. Under La. C.C. art. 368, a court may order for good cause the full or limited emancipation of a minor sixteen years of age or older. La. C.C. art. 368 (West 2009). This remedy, according to comment (g) of C.C. art. 368 states that good cause warranting emancipation may exist when the minors parents need to be protected. The comment states further, For example, emancipation might be appropriate if a minor has run away from home and cannot be found. Emancipation would protect the minors parents from liability for the acts of an absent child whom over whom they have no control. La. C.C. art. 368, comment (g) (West 2009). Consequently, it seems that a negligent and irresponsible parent, who has created an environment in which their child was able to run away, has more remedies available to them than the careful, prudent and responsible parent who has refused to allow a minor to quit the family home. To allow the bad parent to escape statutorily imposed vicarious liability caused by his failure to parent is inappropriate and such a loophole as that created in article 368, comment (g) reveals the alleged underlying policy in article 2318 is unjustifiable. In Audubon Ins. Co. v. Fuller, the court said that the father was liable under article 2318 only if he had legal custody of the minor son, despite the fact the father had physical custody of the minor and the minor resided with the father at the time of the tortious act. 430 So. 2d 343 (La.App. 3 Cir. 1983)(Appellee argues that under C.C. art. 2318 after a judgment of divorce only the parent with legal custody of the child can be vicariously liable for the tortious acts of that child. We agree.) Vicarious liability, therefore, depends on the custodial arrangement decree issued by the court with respect to 11

divorced parents. Parental authority terminates upon divorce and is then conferred upon the minors tutor(s). Therefore, the parent(s) awarded legal custody under the divorce decree will be held

vicariously liable for the acts of minors under article 2318 while the non-custodial parent is immune from liability. Id. at 346 (Considering the Flannigan and Deshotel cases, supra, we agree with the decision of the trial court to the extent that the responsibility of the custodial parent under art. 2318 remains fixed irrespective of the actual residence, and that the parental responsibility under art. 2318 of the non-custodial parent has been suspended by the force and effect of law regardless of the actual residence of the child.). The inherent inequity of cases like Audubon is evident. For example, if the father in Audubon is ultimately found not to have legal custody of the minor, the mother is then personally liable despite having absolutely no control over the actions of the child! Ought an exception like that in article 368 comment (g) be created here? What if mother lives in Baton Rouge and the father lives in Shreveport? Does this comport with Louisianas public policy? If the holding of the trial court below is allowed to stand, then parents around the state will have to necessarily contemplate the impact of personal liability on their patrimony. This consideration will be particularly applicable in custody proceedings. To force parents to weigh the costs of having legal custody of their child, insofar as it makes them susceptible of personal liability, is repulsive to the underlying public interest in maintaining familial and legal relationships between parent and child. Similarly, in Hay v. American Motorist Ins. Co., the court held that a stepfather cannot be vicariously liable for the negligent acts of his stepson. 66 So. 2d 371, 373 (La.App. 2 Cir. 1953)(Obviously [article 2318] does not constitute authority which would justify the imputation of negligence of a stepson to a stepfather. The only relationships carrying such imputation [of negligence] as established by the codal article [2318] are the father, the mother, tutors of minors. The plaintiff in this case falls in none of these categories. And we think it follows that he cannot be held liable for the negligent acts of his stepson.). The court in Hay rejected the insurers arguments to impute negligence based on the fact the minor lived with his mother and stepfather; that the plaintiff stepfather exercised control over the said minor's action and conduct; that he stood in loco parentis; that young Bradford was a part of his household and as a result his negligence is imputed to the stepfather even as the negligence of a minor child is imputable to the father. Id. at 373. Following this rationale, would the plaintiffs only be barred from recovery under the Bargers homeowners policy if Ms. Barger was really 12

Brandons stepmother? What societal benefit does this result have, especially considering the makeup of todays modern family and the prevalence of the blended family? Should victims compensation depend on such uncertainty? Another example is that of Sutton v. Rogers, where the court held, even assuming the minor grandson was negligent, there was no basis for the imputation of his negligence to the plaintiff, his grandfather, under the plain language of article 2318. 222 So. 2d 504 (La.App. 2 Cir. 1969). The court stated that there is no basis for the imputation of his negligence to plaintiff, his grandfather. The rule is that, unless one can be held responsible, as a matter of law, for the torts of a person whose negligence is sought to be charged to him, the doctrine of imputed negligence cannot be applied. Id. at 507 (cases cited therein omitted). The court continued, stating, [s]ince as pointed out in Keenan v. Wactor, 130 So.2d 800, 804 (La.App., 3d Cir. 1961), a grandfather not qualified as tutor of his grandchild is not liable for the latter's torts in the absence of special circumstances not shown to exist here, it was error to impute the grandson's contributory negligence, if any, to the grandfather. Id. at 507 (citations omitted). Why is the grandfather allowed to collect for damages incurred by injury to the child but is excluded from paying out damages caused by the child? If the child had caused damages in this case, the victim would not have been able to seek compensation from the grandfather, which is, of course, offensive to the theme of equity and fairness in the law. The effect of the above cited issues reveals that the literal application of article 2318 has lead to absurd outcomes, inequitable results, and is totally lacking in any legitimate policy rationale, which can be best best summed up as follows: There is little or no jurisprudence on these significant issues. The law in this area begs for clarification. Another difficult question is whether the parents vicarious liability for the minors intentional tort is excluded from coverage when an insurance policy does not provided coverage for intentional torts. Obviously, it is proper to give the intentional tort exclusion effect against the minor as named or omnibus insured. However, if the exclusion also is applied to the parents vicarious liability, they will be denied coverage even though they did not commit an intentional tort. Frank L. Maraist & Thomas C. Galligan, Jr., LOUISIANA TORT LAW 14.08 (2d Ed., No.2, 2004). This res nova issue is ripe for consideration. In fact, this Court gave a shot across the bow to the insurance industry when it stated in Joseph v. Dickerson: In light of our finding that Judith is not vicariously liable for Christina's negligence, we need not address the validity of the endorsement provision that denies coverage for negligence imputed to the named insured arising out of the excluded driver's use of the car. Specifically, if Judith had been deemed vicariously liable for Christina's negligent conduct, then an important public policy question would arise regarding an insurance policy covering the insured, but 13

nonetheless denying coverage to the insured for vicarious liability. Joseph v. Dickerson, 99-1046, 00-1188 (La. 1/19/00), 754 So. 2d 912 (emphasis added). B. Exclusionary Provisions Contravene Public Policy as Delineated by the Insurance Code and Commissioner of the State of Louisiana. The plaintiff contends Directive 152 proves that Allstates intentional acts exclusion is in violation of public policy, particularly in light of the timing of its issuance. The intent of Directive 152 was to clarify the confusion surrounding Directive 149. Just as a court must engage in an analysis of statutory construction to determine the meaning and intent of the legislature, so too must the court with directives issued by the Insurance Commissioner. Both the court and commissioner must remain cognizant that the most fundamental postulate of the Insurance Code, an irreducible principle which contextualizes the legal interpretation of the specific provisions of the Code, is that it be administered and regulated by the government for the benefit of the public interest and not for the financial aggrandizement of the insurance industry itself. La. R.S. 22:2; See La. Atty. Gen. Op. No. 1990-411 (citing Opinions of the Attorney General Nos. 90-471 and 88-193). The nature of the insurance business is impressed with the public interest and therefore the legislature in large measure fixes the public policy. The right to transact the business of insurance, and the nature of the insurance business which may be lawfully conducted, is always subject to this regulatory power in the public interest, which is delegated through legislative act to the Commissioner and the Department of Insurance. See La. Atty. Gen. Op. No. 1990-411 (Finding the action of the Department of Insurance in disapproving the Liquor Liability Exclusion for the basic insurance policy form was entirely lawful in light of the existing and continuing liability for tortious harms resulting from intoxication under three exceptions found in La. R.S. 9:2800.1). Directive 152 clearly states that "the Department of Insurance views the use of any type of limitation clause in a homeowner's policy which results in limiting the liability coverage of an insurer for parents' vicarious liability for acts of their children is against the public interest." [emphasis supplied]. If, in drafting Directive 152, the Commissioner had intended to restrict his comments on parental vicarious liability only to negligent acts, he could have easily done so. Had the Commissioner intended the law to be analyzed in the manner in which it was in Baugh, a contrario, there would have been no need for Directive 152. Directive 149 would have sufficed. Reading the two directives a pari materia, it is clear that Directive 152 was promulgated to inform all insurance providers that no limitation to liability would be allowed. See Duncan v. USAA Ins. 14

Co., 950 So.2d 544 (La. 11/29/06)([T]he legislature is presumed to have enacted an article or statute in light of the preceding law involving the same subject matter and court decisions construing those articles or statutes, and where the new article or statute is worded differently from the preceding law the legislature is presumed to have intended to change the law. La. R.S. 24:177(C).) Because of the Commissioner's role in the regulation of Louisiana insurance law, his opinion regarding matters within his province, such as protection of the public interest in the realm of insurance, is persuasive. Doerr v. Mobile Oil Corporation, 00-0947 at 23-24, 774 So.2d at 119, 134 (La. 12/19/00). Given the context these particular directives have in this litigation, however, the plaintiff asserts even more weight should be given to the Commissioners directive insofar as it is a vehicle through which the commissioner expounds on his interpretation of the insurance code, regulates the insurance industry, and fulfills his duty to protect the public interest. While directives are usually just helpful tools among others a court uses in determining the issue of insurance coverage, this particular case is an exception insofar as the agency charged with the responsibility has expressly prohibited a specific type of denial of coverage, promulgated rules to that affect, and has done so in response to exceptional vulnerabilities by the average insurance consumer. In Baugh v. Ray, the First Circuit held that an insurance clause limiting coverage for parental vicarious liability, without specifically advising the insured for the reduction in the coverage, was not contrary to public policy. Baugh v. Ray, 97-2625 (La.App. 1 Cir. 5/5/99), 751 So.2d 888 (on rehearing). The court based its decision on the absence of any law mandating coverage for vicarious liability as well as the absence of any public policy prohibition against lower limits for vicarious liability coverage. Id. at 888-889. In response to this decision, the Commissioner issued Directive 152 on June 9, 2000. See Reinhardt v. Allstate, 2007-2363 (La.App. 1 Cir. 04/29/09)(Pettigrew, J., concurring, finding that Directive 152 established a public policy prohibiting an insurer from limiting the liability coverage available to parents due their statutorily imposed vicarious liability for both the negligent and intentional acts of their minor children.). Of what purpose is the Insurance Commissioner and the Department of Insurance if no insurance company is bound by its directives, bulletins and administrative findings? Of what effect does it have? The court in Benefit Recovery, Inc. v. James J. Donelon answered these questions as follows: In Louisiana, a directive is a written communication or order issued by or on behalf of the commissioner of insurance to a person whose activities are regulated by this Title, which instructs the person to act in conformance with this Title, or any rule or regulation adopted in accordance with the Administrative Procedure Act. LA. REV. STAT. ANN. 22:5(6) (2004). 15

In other words, to the extent that directives have the effect of law, it is because they merely expound on what is already in the insurance code. At the same time, there are punitive consequences for violating a directive. See, e.g., La. R.S. 22:1316(A)(2004)(Any person subject to the regulatory authority of this department who fails to comply with any directive issued by the commissioner in connection with a consumer complaint shall be fined an amount an amount not to exceed two hundred and fifty thousand dollars for each occurrence.). There is no need for us to engage in a metaphysical inquiry into the nature of law or its effects where the hand of the state firmly, though not harshly, requires compliance. Benefit Recovery, Inc. v. James J. Donelon, 07-30414 (5th Cir. 2007)(emphases added). While of course it is evident that directives, bulletins and advisory letters do not have the binding effect like that of Louisianas two sources of law, it is nevertheless the most helpful and explanatory source of information a court has when it comes to resolving alleged violations of public policy. See Delta Life Ins. Co. v. Martin, 59 So.2d 465, 474-475 (La.App. 1 Cir. 1952)(citations omitted)(when officers specially charged with the observance and enforcement of a particular law have for a long time determined its meaning and acted accordingly, their interpretation is entitled to great weight.). This Courts appreciation of this fact is evident in Doerr v. Mobile Oil Corp. where this Court relied heavily on the advisory letters of the Insurance Commissioner in determining the propriety of its interpretation regarding an exclusionary provision. See Doerr v. Mobil Oil Corporation, 00-0947, p. 4 (La. 12/19/00), 774 So.2d 119; see also Delta Life Ins. Co. v. Martin, 59 So.2d 465, 475 (La.App. 1 Cir. 1952)(citations omitted)(The practical construction given to a doubtful statute by the public officers of the state, and acted upon by the people thereof, is to be considered; it is perhaps decisive in a case of doubt.). Comparing the Supreme Courts analysis in Doerr with the courts analysis below, it is quite evident that the lower courts failed to consider Directive 152 to its fullest weight, scope, and purpose. For this reason, this Court must grant a writ to resolve the significant issue with regard to the import, influence, and proper deference courts should give to the insurance commissioner. By ignoring the commissioners expertise, several lower courts have come to poorly decided holdings and as a result have put the publics interest in jeopardy. Perkins is an example of a lower court that failed to properly analyze Directives 149 and 152 together. Perkins v. Shaheen, 867 So.2d 135, 139, 03-1254 (La.App. 3 Cir. 03/03/04). Perkins erred by relying on the decision of Baugh v. Ray, since it had already been widely viewed as an improvidently decided case. See W. Shelby McKenzie & Alston Johnson, III, INSURANCE LAW AND PRACTICE 164, p. 465 n.60. In Directive 149, the Commissioner announced that concerns had been raised with respect to certain provisions being inserted by insurers in order to limit coverage for a parents vicarious liability 16

resulting from the acts of the minor child. (emphasis added). After reviewing the scope of the problem, the Commissioner issued Directive 152, in which he concluded that the exclusions were indeed detrimental to the citizens of the state and were a violation of public policy. The courts below both gave Directive 152 a passing glance as merely persuasive and not law that should be considered. Ironically, the justification for dismissing the directive is equally applicable to the weight of jurisprudence given by the courts below, since it too is not a source of law and is merely persuasive. See Doerr, 774 So.2d 119. Regardless of the ultimate classification, the force and effect of Directive 152 upon a court is entirely different from its applicability to an insurer under the regulatory power of the Department of Insurance. Promulgations such as Directive 152 are mandatory for insurers. Allstate is attempting to do indirectly what it cannot do directly: ignore the regulatory authority of the Insurance Commissioner. Allstate is effectively ignoring the mandates of the Commissioner under the guise of litigating the plain language of the contract and the persuasive authority the directives have with the courts. In Duncan v. USAA Ins. Co., this Court found absurd the argument that the statute only requires those components explicitly mentioned, implying some requirements were optional or precatory, because such a conclusion would necessarily render the commissioners promulgation of forms unnecessary). Duncan v. USAA Ins. Co., 950 So.2d 544 (La. 11/29/06) Such a tactic should not be tolerated by this Court in this context either. Directive 152 also emphasizes that most parents will likely be surprised to learn that their homeowners insurance excludes them from personal liability. This lack of knowledge, however, was expected by the Commissioner since most people do believe that their children are covered and the Commissioner further states that this belief was reasonable, given the purpose for buying liability insurance. As a result, the Insurance Commissioner was compelled to act to protect the public interest and therefore promulgated Directive 152. Should this Court not grant a writ, Allstate effectively would be able to maintain immunity from state regulation by making private contractual arrangements. La. Atty. Gen. Op. No. 1990-411, 8-9 (citations omitted). The standard for subjecting private contracts to the States police power is pointedly applicable here: the postulate of all legal order is that the state may not bargain away or otherwise be prevented from exercising its police power, viz. the exercise of the sovereign right of the government to protect the lives, health, morals, comfort and general welfare of the people. Board of Comrs. v. Dept. of 17

Nat. Resources, 496 So.2d 281, 293 (La. 1986). The governing judicial standard is aptly met in this case. The Commission took action to protect the public interest when he issued Directive 152. Allstate has yet to comply with the mandates of that directive. As a result, the defendant here, Ms. Barger, has suffered. So, too, have the plaintiffs. Other states have also held, like the Insurance Commissioner, that because of the unexpected nature of the liability, similar intentional acts exclusions regarding statutorily imposed liability should be rendered null and unenforceable. See Property Casualty of MCA v. Conway, 147 N.J. 322, 687 A.2d 729 (1997)(citing Arenson v. National Auto. And Cas. Ins. Co., 45 Cal. 2d 81, 286 P.2d 816, 817 (1955); Walker v. Lumbermans Mut. Cas. Co., 491 S.W.2d 696, 698-99 (Tex. Civ. App. 1973); Unigard Mutual Ins. Co. v. Argonaut Ins. Co., 20 Wash. App. 261, 579 P.2d 1015, 1017 (1978); White v. Legarde, 359 So.2d 652 (La. Ct. App. 1978)). These states have found that it is unreasonable to hold parents vicariously liable for the acts of minors and then refuse to allow them to take steps to protect themselves from liability. Directive 152 is in agreement this public policy. Other states have also successfully balanced the competing policy interests in this type of situation in a variety of ways that would not only be feasible in Louisiana but arguably quite satisfactory. For example, public policy prohibits an insured from the benefit of coverage for damages caused by his intentional acts. Societal desires to deter misconduct and reprimand the wrongdoer by imposing personal liability are legitimate. So too is the insurance companies desire to only insure those against fortuitous risks, so as to more effectively spread risks, keep premiums down, and prevent abuse by those gaming the system. However, society also demands that the innocent victim be made whole and compensated for their damages. Therefore, in Ambassador Ins. Co. v. Montes, the court held that the tortfeasor insured would indemnify the insurer for the losses paid on account of his intentional acts via subrogation. As a result, the insured receives no benefit from his intentional acts and the innocent victim is compensated and thus both public policies are satisfied. Ambassador Ins. Co. v. Montes, (388 A.2d 603, (N.J. 06/06/78); See Hazel Glenn Beh, Tort Liability for Intentional Acts of Family Members: Will Your Insurer Stand By You?, 68 Tenn.L.Rev.1, 38 (2000). While some of these problems will inevitably arise, most plaintiffs will soon learn that, rather than asserting intentional acts in their petition, alleging mere negligence will allow them greater chance at compensation and the opportunity to be made whole. In conjunction, collusion will likely occur as it has in Louisiana in other contexts as well as numerous other states in order for the victim to have the 18

best opportunity to be fully compensated while affording the insured the protection of their insurance coverage. Again, the absurdity in the argument that to allow coverage at present would lead to abuse and manipulation is evidence by the already present abuse at the present state of affairs. See Hazel Glenn Beh, Tort Liability for Intentional Acts of Family Members: Will Your Insurer Stand By You?, 68 Tenn.L.Rev.1, 38 (2000). Similarly, any fears as to the potential for abuse by parents with this allege new found protection to use their children as their intentional actors could be solved by La. C.C. art. 2324 which states that He who conspires with another person to commit an intentional or willful act is answerable, in solido, with that person for the damage caused by such act. Therefore, even if the parent was covered due to vicarious liability of the childs tort, they will nevertheless be excluded from coverage due to their own intentional acts. This will allow the innocent victim to be compensated by the insurer who may then seek indemnification against the solidarily liable parent. No part of Louisianas public policy would be offended by affording insurance coverage for a liability imposed upon parents under our statutes by virtue of their status as parents of the tortfeasor minor and not because of any actual wrongdoing on their part. In fact, the opposite has proven to be offensive to the states public policy time and again. CONCLUSION In light of the significant involvement of our citizens with liability contracts, concomitant governmental involvement is easily predictable. Moreover, the nature of the contract is such that it may tend toward an adhesion relationship. The insured is often an individual with relatively little bargaining power and similarly slight expertise in the field of insurance. The insurer is very often a company of both substantial size and expertise. Together these factors invite, though do not require, a relationship of adhesion. In such a potential relationship, the usual rule found in the Civil Code that the parties may make law between themselves by contract, and are free to include virtually whatever is not prohibited in such an agreement, is not entirely appropriate. Rather one finds the parameters of the bargaining arena between the insurer and the insured sharply limited and carefully patrolled by regulatory authorities. See W. Shelby McKenzie & Alston Johnson, III, INSURANCE LAW AND PRACTICE 3 (West 2009). This is not an area of the law in which the legislature or the courts have been willing to leave the players to their own devices. Either because of the substantial monetary investment by citizens, or of the perils to which they would be exposed without the coverage they may have thought they were 19

purchasing, or of the disparity between the size and expertise of the contracting parties, or perhaps for all three reasons, the playing field is sharply circumscribed and closely umpired. Id., supra. For the courts below to have found the intentional acts exclusion enforceable as to the vicarious liability of the innocent parent is in direct contravention with all three of the abovementioned public policy protections. For the reasons set forth above, Plaintiffs-Petitioners respectfully submit to this Honorable Court, that it should grant review of the decisions of the Courts below dismissing Allstate Insurance Company from the present case because of the erroneous decisions on an issue of law of substantial significance, widespread public interest, and public policy implications that will be felt by every citizen of the State. The Commissioner of Insurance should be invited by this Court to participate as amicus curiae on the merits. Respectfully Submitted, Gibson Law Office By:______________________ Emily Gibson (12345) 102 Law Center Baton Rouge, Louisiana Telephone: (225) 000-0000 Facsimile: (225) 000-0000 Attorney For Plaintiffs-Petitioners, Cathy Reinhardt, et al.

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VERIFICATION

Pursuant to Section 2(d) of Rule X of the Supreme Court of Louisiana, I hereby verify the allegations of this petition, and certify that a copy of this petition has been sent to the Court of Appeal First Circuit, State of Louisiana, as well as to the Hon. Reginald Badeaux, District Judge, 22nd Judicial District Court for the Parish of St. Tammany, and to all other parties or counsel of record, as listed below, at or before the time of filing with this Court, by United States mail postage prepaid, this 1st day of November, 2009:

Jude H. Trahant, Jr. KELLER & TRAHANT, L.L.C. 506 Water Street Madisonville, Louisiana 70447 Counsel for Defendant-Respondent, Allstate Insurance Company Peter M. Donovan DONOVAN & LAWLER, A.P.L.C. 4640 Rye Street Metarie, Louisiana 70006 Counsel for Defendants, Mrs. Barbara Barger, et al.

______________________________ Emily Gibson Attorney for Plaintiffs-Petitioners, Cathy Reinhardt, et al.

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